Coventry has some small print shocks for borrowers too
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In catching up with my Mortgage Strategy reading recently I came across an article about Chesham Building Society’s contract terms being deemed unfair by the Financial Services Authority. I have a case which is similar to Chesham, but with Coventry Building Society.
Having recently arranged for the porting of an existing rate for a client’s new purchase I was vigilant when checking the offer terms.
In particular I focussed on the ’Mortgage and product special conditions’ with regard to simultaneous transaction due to the client retaining their existing property for investment purposes.
Under the section entitled ’Product Special Condition 2’ it states that “the society reserves the right to cancel the arrangement set out in Product Special Condition 1 and to charge its then SVR if, on or before the end of the arrangement, the mortgage account falls one monthly payment or more into arrears”.
Given that the client’s current rate is a lifetime tracker at Bank of England base rate plus 0.85% - i.e. 1.35% - his monthly payment will be £927.
But should something unfortunate happen financially and he were to go into arrears his rate would jump to 4.74% which would hike his payments to £1,310 a month just at the time he needs support from his lender rather than a kick in the teeth. How can this be treating customers fairly?
JOHN WHYTE
WHYTE FINANCIAL
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